Increasing renewable content in fuels

ERO number
013-4598
Notice type
Regulation
Act
Environmental Protection Act, R.S.O. 1990
Posted by
Ministry of the Environment, Conservation and Parks
Notice stage
Decision Updated
Decision posted
Comment period
February 12, 2019 - March 29, 2019 (45 days) Closed
Last updated

Update Announcement

This proposal notice has been updated to inform the public on July 28, 2020, that this proposal is still under review. The ministry is reviewing the comments received to date. The original date of the proposal and the comment period have not been changed.

November 25, 2020

This consultation was open from:
February 12, 2019
to March 29, 2019

Decision summary

The Ministry of the Environment, Conservation and Parks has amended Ontario’s clean fuel regulations to increase renewable content, such as ethanol, in gasoline over the long-term without an expected increase in prices at the pump.

Decision details

The transportation sector is Ontario’s largest source of greenhouse gas (GHG) emissions, generating about a third of Ontario’s total GHG emissions. The use of renewable fuels, such as ethanol, is one way of reducing these emissions and supporting biofuel producers.

As part of our Made-in-Ontario Environment Plan, Ontario is committed to reducing greenhouse gas emissions from the transportation sector.

That’s why we have amended Ontario’s clean fuel regulations to gradually increase renewable content in gasoline, which is expected to improve the environmental performance of gasoline, without an expected increase in the price at the pump.

These changes were made by revoking O. Reg. 535/05 (Greener Gasoline) and O. Reg. 97/14 (Greener Diesel) and creating a single, new “Cleaner Transportation Fuels: Renewable Content Requirements for Gasoline and Diesel Fuels” (O. Reg 663/20) regulation that maintains separate renewable content requirements for gasoline and diesel.

The new regulation is now in effect and also includes the Technical Guideline: Cleaner Transportation Fuels, which is incorporated by reference pursuant to s. 177(5) of the Environmental Protection Act.

What the new Cleaner Transportation Fuels regulation changes

Increases renewable content in gasoline

Fuel suppliers are now required to maintain an average volume of renewable content in regular grade gasoline, which will increase in amount each calendar year:

  • 11% in 2025
  • 13% in 2028
  • 15% in 2030

We are also requiring decreases in greenhouse gas emissions from renewable content by 50 per cent on average, compared to fossil gasoline on a lifecycle basis from 2030. This performance requirement is assessed across the fuel’s lifecycle (i.e. from extraction or cultivation to processing, distribution, and end-use combustion).

Prior to these changes to the law, Ontario required an average of 10% renewable content in regular grade gasoline, with the renewable content having on average 45% fewer GHG emissions than fossil gasoline.

The increase to the renewable content in gasoline will support the biofuel and agriculture sectors in their long-term economic recovery from COVID-19, create jobs in rural communities, and help reduce Ontario’s greenhouse gas emissions.

Extends the compliance period as a response to COVID-19 impacts

Our new Cleaner Transportation Fuels regulation extends the 2020 compliance year into a two-year compliance period (2020-2021) to provide fuel suppliers with more time to manage compliance and financial concerns arising from COVID-19, including the decrease in demand for transportation fuel and other supply chain impacts.

Enhances regulatory efficiency and supports industry compliance through updates to administrative requirements

We have updated fuel supplier reporting requirements to improve aggregate fuel industry information. For example, we require reporting on the average monetary value of compliance volumes transferred to and from the records of other fuel suppliers.

We have transferred technical GHG performance requirements from previous regulations to our new Technical Guideline: Cleaner Transportation Fuels under our Cleaner Transportation Fuels regulation. These changes will allow us to be nimbler in the updates we make, for example adopting a new lifecycle model or new technology, data, and methodologies. We will maintain the environmental integrity of the regulation by updating GHG performance benchmark values of gasoline, diesel, and biofuels when appropriate, for example if adopting a new model to ensure a similar level of GHG reductions.

 Continues use of the GHGenius Model

To determine GHG performance, and as specified in our new guideline, fuel suppliers will continue to use GHGenius 4.03a or 4.03b. This is consistent with the requirements under the previous regulations.

An alternative approved method can be requested for other fuels and production processes that are not yet part of the GHGenius model.

Comments received

Through the registry

39

By email

29

By mail

0
View comments submitted through the registry

Effects of consultation

The ministry considered all comments received on the proposal prior to the regulatory changes being made.

The following factors supported design of the final regulation and timing of the program:

1. Timing

Some stakeholders prefer an accelerated timeline (e.g. 15% in 2025 or 2027; starting in 2021 or 2023), while others suggested not to proceed, or to defer to 15% in 2030 or 2035.

Response: Ontario is using a phased approach to implement requirements, allowing time for infrastructure upgrades, natural replacement of retail equipment, and vehicle turnover.

2. Greenhouse gas reduction performance requirements

Some stakeholders prefer to maintain a 45% GHG performance requirement and others to increase to 55% over time. One suggestion was to decrease to 25% when blending requirements are over 10%, beginning in 2030.

Response: Ontario is setting performance benchmarks that are achievable and reflect the natural improvement in renewable fuel production efficiency.

3. Lifecycle assessment model

We’ve received advice for the following options: updating to newer GHGenius 5.0 or using the federal lifecycle assessment model once it is released.

Response: While we continue to monitor the progress of the federal model, our new guideline specifies that GHGenius 4.03a or 4.03b will be used at this time. Our transfer of technical requirements from existing regulations to our new guideline allows us to respond to market factors in a nimble manner and adopt a new model or model version.

4. Regulatory scope

There is consensus to maintain existing exclusions such as boats, planes, classic cars, and mid and premium grade gasoline.

There were requests for additional flexibility mechanisms, including exemptions for Northern Ontario until 2033, allowing trading of compliance volumes between gasoline and diesel pools and credit for early action.

Response: Ontario is maintaining existing exclusions and separate compliance requirements for gasoline and diesel.

5. Reporting

There was some support for including average value of compliance unit transfers as a reporting requirement.

Response: To support a transparent, dynamic fuel market, Ontario is requiring fossil fuel suppliers to report on the average value of compliance volumes transferred to and from the records of other fuel suppliers.

Supporting materials

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Important notice: Due to the ongoing COVID-19 pandemic, viewing supporting materials in person is not available at this time.

Please reach out to the Contact listed in this notice to see if alternate arrangements can be made.

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Original proposal

ERO number
013-4598
Notice type
Regulation
Act
Environmental Protection Act, R.S.O. 1990
Posted by
Ministry of the Environment, Conservation and Parks
Proposal posted

Comment period

February 12, 2019 - March 29, 2019 (45 days)

Proposal details

Proposal details

The purpose of these proposed amendments is to support Ontario’s goal to achieve its share of Canada's 2030 emissions reduction target, as proposed in the made-in-Ontario environment plan.

Historically, ethanol prices have generally been lower than gasoline prices on a volume basis and blending ethanol in gasoline has been a more cost-effective way to enhance fuel performance compared to other octane enhancers (such as benzene, toluene, and xylene).

Proposed regulation amendments

We are proposing the following amendments to O. Reg. 535/05 (Ethanol in Gasoline) under the Environmental Protection Act, R.S.O. 1990, c. E.19:

  1. require gasoline fuel suppliers to maintain an average of 15% renewable content (e.g. ethanol) in regular grade gasoline, by volume per calendar year as early as 2025
  2. require renewable content (e.g. ethanol) used for compliance to emit significantly fewer greenhouse gas emissions than petroleum gasoline, on a lifecycle basis, concurrently
  3. other potential updates related to a new lifecycle assessment model, e.g. updating the compliance formula.

We are also considering updates to ensure that O. Reg. 97/14 (Greener Diesel – Renewable Fuel Content Requirements for Petroleum Diesel) is consistent with the Ethanol in Gasoline regulation.

For both regulations, we will consider opportunities to:

  • clarify requirements
  • support innovation for Ontario businesses.

Purpose of regulation

The purpose of these proposed amendments is to support Ontario’s goal to achieve its share of Canada's 2030 emissions reduction target (reduce its emissions by 30% below 2005 levels by 2030), as proposed in the made-in-Ontario environment plan.

The environment plan was released for public consultation on November 29, 2018, for a 60-day period. It will help protect our air, land and water and reduce litter and waste while lowering greenhouse gas emissions and helping communities protect themselves from climate change.

The plan includes a proposal to increase the renewable content (e.g. ethanol) in gasoline to 15% as early as 2025 through amendments to Ontario fuel regulations.

We will work with stakeholders to support the implementation of these amendments.

Other information

Ontario’s Ethanol in Gasoline regulation currently requires an average of 5% ethanol in gasoline.

In 2020, amendments will come into effect requiring 10% bio-based content in regular gasoline. The bio-based content will be required to have an average of 45% fewer greenhouse gas emissions than petroleum gasoline, assessed across the fuel’s lifecycle. Lifecycle greenhouse gas emissions refer to emissions across the fuel’s production, delivery and use stages.

By increasing use of renewable content such as ethanol we will reduce emissions without raising costs at the pump. This is based on current ethanol and gasoline prices, and experiences in other jurisdictions with similar policies.

Other public consultation opportunities

Comments received through the Environmental Registry on the made-in-Ontario environment plan will also be considered in relation to this proposal.

We are interested in your feedback on this proposal within the broader framework of the proposed federal carbon tax.

Regulatory impact statement

If Ontario were to increase and implement the renewable content in regular grade gasoline from 10% to 15% in 2025, it could result in 1.2 megatonnes of greenhouse gas emission reductions.

We expect there will be no increase in the retail price of gasoline as a result of the proposed amendments. Historically, ethanol prices have generally been lower than gasoline prices on a volume basis and blending ethanol in gasoline has been a more cost-effective way to enhance fuel performance compared to other octane enhancers (such as benzene, toluene, and xylene).

Ontario’s fossil fuel suppliers may incur costs to comply with the proposed requirements. However, overall cost impacts to fuel suppliers will depend on the price difference between ethanol and gasoline and the cost of other octane substitutes, as well as the cost impacts of any distribution or retail upgrades that have to be made.

Based on comparing retail pricing before and after implementing renewable fuel policies, experience in Ontario and other provinces (British Columbia, Alberta, Saskatchewan; Manitoba) indicates no observable price impact from the implementation of similar policies.

The proposed federal carbon tax would provide a credit to ethanol when gasoline contains more than 10% ethanol. If the federal carbon tax is applied in Ontario, increasing ethanol blending from 10% to 15% would save gasoline consumers 1.2 cents per litre in carbon tax at full implementation. These savings would be additional to other cost benefits that ethanol provides.

The emission systems of more than 90% of the current passenger vehicle fleet is compatible with gasoline that has 15% ethanol, and this proportion is expected to be close to 99% in 2025 as older vehicles are replaced with newer models. No vehicle or equipment issues are associated with advanced biofuel technologies, like renewable gasoline, which are chemically similar to fossil gasoline.

Ethanol-free gasoline and lower ethanol blends can still be offered for vehicles or equipment that cannot accept higher blends. Marine, aviation, off-road and classic vehicle uses are exempt from the requirements of the regulation. Under the requirements for 2020 and beyond, premium grade gasoline will not have a renewable content requirement.

The price of diesel fuel is not anticipated to increase as a result of the proposed amendments to the Greener Diesel regulation.

Supporting materials

View materials in person

Important notice: Due to the ongoing COVID-19 pandemic, viewing supporting materials in person is not available at this time.

Please reach out to the Contact listed in this notice to see if alternate arrangements can be made.

Comment

Commenting is now closed.

This consultation was open from February 12, 2019
to March 29, 2019

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